By
Godfrey Benjamin
April 18th, 2024
After the long-awaited IPO, Saudi Aramco shares surged which takes the oil producer’s valuation to a record $1.88 trillion level.
The IPO of Saudi Aramco was probably one of the most hotly-anticipated companies’ initial public offerings this year. And it has really met the expectation of many (and even gone beyond).
The shares of Aramco have surged after it. As a result, the valuation of this world-famous oil producer hit a record of $1.88 trillion. These figures have taken the stock market of Saudi Arabia to the position of the largest in the world.
In early deals in Riyadh, the stock of the company increased to 35.2 Saudi riyals, which is approximately $9.38, from 32 riyals. It means that they managed to jump the daily 10% limit.
Aramco has made history as its offering has become the biggest-ever IPO with $25.6 billion raised. Even with the valuation of $1.7 trillion (as the initial price for shares was established at the level of 32 riyals apiece), the company has overtaken such tech giants as Apple and Microsoft in the ratings of the most valuable listed companies.
Despite such results, it’s worth mentioning that the valuation of $1.88 trillion is still not the figure that the government had initially set when it planned to rely on local investors only a couple of years ago. For the first time, the plans for conducting an IPO were revealed in 2016.
At that period Crown Prince Mohammed bin Salman spoke about the company’s valuation of $2 trillion. But earlier this year, this impressive figure was taken down by banks and financial experts. They believed that it should be between $1.5 and $1.7 trillion.
However, the company’s management seemed to be very pleased with the results. Its CEO Amin Nasser shared his thoughts with the media:
“We are happy on the results today. And you have seen the market responds to our results, the company will continue to be the leader globally when it comes to the energy sector and at the same time we are looking at sustained and growing dividends to our investors. At the same time we continue our growth strategy, increasing profitability across cycles.”
It is believed that the United Arab Emirates and Kuwait have greatly contributed to Saudi Aramco success. Earlier Coinspeaker has already reported that the Kuwait Investment Authority was allegedly planning to bring $1 billion in the IPO. Abu Dhabi authorities are reported to have invested $1.5 billion. However, there are no official comments on this issue.
Moreover, it is said that among the investors there are the richest families from Saudi Arabia who strongly believe that the stock will increase thanks to incentives that include bonus shares.
However, let’s not forget that in any case investments in Aramco are related to some risks starting with those that are obvious for the gas and oil industry in general and ending up with security risks (in September there was a drone attack on Aramco’s oil production).
It’s also worth mentioning that according to the promises of Aramco, bumper dividend payment will be done for at least a couple of years until 2024 and will represent minimum $75 billion per year.